Turkey amends securities finance and short selling rules
16 March 2021 Turkey
Image: Shchipkova_Elena/adobe.stock.com
The Capital Markets Board of Turkey has made several amendments to the rules governing securities lending, margin lending and short selling, including the inclusion of exchange-traded funds (ETFs) as valid collateral.
The Official Gazette was updated on 5 March and the rules came into effect on 12 March with amendments to the ratio of open clearing positions, settlement of shares subject to gross settlement and scope and calculation of margin ratio.
First, the obligation to maintain net assets in the amount of at least 20 per cent of the possible open clearing positions has been amended. Possible open clearing positions are now determined in accordance with the regulations of Borsa Istanbul with respect to capital market instruments and markets.
Furthermore, the board is authorised to determine and amend the ratio of open clearing positions for capital market instruments and markets.
Second, a new rule allows use of the cash proceeds from the sale of shares subject to gross settlement for settlement obligations regarding shares subject to net settlement and vice versa.
The cash proceeds from the sale of shares subject to gross settlement may not be used for the settlement obligations regarding other shares subject to gross settlement, according to the communiqué.
Meanwhile, the scope of legitimate collateral now includes participation shares of investment funds and ETFs.
The rules for valuing new collateral types include: 90 per cent of participation certificates of ETFs, and 75 per cent of participation certificates of investment funds under equity umbrella funds participation certificates of investment funds under hedge funds.
The sale proceeds of the shares including the ones of which the equity rate is determined as zero pursuant to the regulations of BIST or which are subject to gross settlement, may now be included in the equity amount based on its cash value.
Next, for the transactions subject to gross settlement, the prime broker and its underlying client are now liable for making available the sufficient cash amount on the settlement date.
Finally, the proceeds of the share sales including the ones of which the equity rate is determined as zero, or which are subject to gross settlement, may now be included in the equity amount based on its cash value.
The Official Gazette was updated on 5 March and the rules came into effect on 12 March with amendments to the ratio of open clearing positions, settlement of shares subject to gross settlement and scope and calculation of margin ratio.
First, the obligation to maintain net assets in the amount of at least 20 per cent of the possible open clearing positions has been amended. Possible open clearing positions are now determined in accordance with the regulations of Borsa Istanbul with respect to capital market instruments and markets.
Furthermore, the board is authorised to determine and amend the ratio of open clearing positions for capital market instruments and markets.
Second, a new rule allows use of the cash proceeds from the sale of shares subject to gross settlement for settlement obligations regarding shares subject to net settlement and vice versa.
The cash proceeds from the sale of shares subject to gross settlement may not be used for the settlement obligations regarding other shares subject to gross settlement, according to the communiqué.
Meanwhile, the scope of legitimate collateral now includes participation shares of investment funds and ETFs.
The rules for valuing new collateral types include: 90 per cent of participation certificates of ETFs, and 75 per cent of participation certificates of investment funds under equity umbrella funds participation certificates of investment funds under hedge funds.
The sale proceeds of the shares including the ones of which the equity rate is determined as zero pursuant to the regulations of BIST or which are subject to gross settlement, may now be included in the equity amount based on its cash value.
Next, for the transactions subject to gross settlement, the prime broker and its underlying client are now liable for making available the sufficient cash amount on the settlement date.
Finally, the proceeds of the share sales including the ones of which the equity rate is determined as zero, or which are subject to gross settlement, may now be included in the equity amount based on its cash value.
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